FleetPartners Group Limited reported strong FY24 results with record new business writings and assets under management, underpinning a robust growth trajectory and a significant $30 million share buy-back announced for 1H25.
- Record FY24 new business writings (NBW) up 21%
- Assets under management (AUMOF) grew 11% to $2.28 billion
- Recurring revenue model delivers 95% of NOI pre EOL & provisions
- $88 million NPATA with 128% organic cash conversion
- Announced $30 million share buy-back for 1H25, representing 65% of 2H24 NPATA
Strong FY24 Performance Highlights
FleetPartners Group Limited (ASX: FPR) unveiled its 2025 Annual General Meeting presentation materials, showcasing a year of robust financial and operational achievements. The company recorded a 21% increase in new business writings (NBW) and an 11% growth in assets under management (AUMOF), reaching $2.28 billion. This growth was driven by strategic initiatives across its core markets in Australia and New Zealand, supported by a recurring revenue model that now accounts for approximately 95% of net operating income (NOI) before end-of-lease (EOL) and provisions.
NPATA (Net Profit After Tax and Amortisation) reached $88 million, reflecting disciplined cost management and optimisation of EOL processes. The company also reported a high organic cash conversion rate of 128%, underscoring strong cash flow generation from its expanding asset base.
Strategic Pathways Fuel Growth
FleetPartners' Strategic Pathways initiative continues to deliver momentum across three key segments: Corporate (Australia and New Zealand), Small Fleets, and Novated leasing. The Corporate segment saw a 20% uplift in NBW, with new customer wins in insurance, manufacturing, and healthcare sectors. Small Fleets achieved a record $47 million NBW, up 41% year-on-year, supported by a new self-service website calculator enhancing direct sales capabilities.
The Novated leasing business capitalised on strong electric vehicle (EV) demand, with EVs comprising 53% of FY24 NBW. This segment grew NBW by 36%, bolstered by new customer wins in technology and professional services and the launch of white label pilot programs with multiple original equipment manufacturers (OEMs).
Accelerate Business Transformation Program
FleetPartners is progressing its Accelerate program, aimed at consolidating brands, systems, and processes to drive profitability and operational efficiency. The program includes migrating from two ERP systems to a single modern platform, expected to reduce IT costs and improve digital innovation speed. Although the estimated capital expenditure has increased to $30 million, the anticipated annual operational savings of $6 million and a 24% return on assets remain intact.
Key milestones include the launch of a new website and procurement portal, consolidation from four brands to one, and nearing completion of user acceptance testing for the new ERP system, with a go-live target set for March 2025.
Capital Management and Share Buy-Back
In line with its capital management strategy, FleetPartners announced a $30 million share buy-back for the first half of FY25, representing 65% of the second half of FY24 NPATA. This follows a $29.4 million buy-back completed in 2H24. Since May 2021, the company has repurchased and cancelled approximately 32% of its shares on issue, reflecting a strong commitment to returning capital to shareholders.
The buy-back is considered the optimal capital distribution method in the absence of franking credits, which are not expected until at least FY26 due to Temporary Full Expensing legislation. The company remains open to alternative uses of capital should superior return opportunities arise.
Outlook and Market Conditions
FleetPartners provided a 1Q25 trading update indicating a 6% increase in NOI pre EOL and provisions compared to the prior corresponding period, driven by asset growth. While new business writings were 7% lower overall, Novated leasing showed resilience with a 1% increase. The New Zealand fleet segment faced subdued demand amid challenging economic conditions.
Vehicle supply has normalised, eliminating significant wait times for key models. However, used vehicle prices continue to decline, with EOL per vehicle at $5,533 in 1Q25, expected to trend towards pre-COVID-19 levels in the coming years. The company anticipates continued strong unit sales supported by supply availability and ongoing optimisation of sales channels.
Looking ahead, FleetPartners expects growth in AUMOF to partially offset margin normalisation and funding transitions. Operating expenses are forecast to rise due to activity levels and inflation but will be partially mitigated by Accelerate program benefits. The company maintains a stable tax outlook, with no Australian corporate tax cash payments expected in the near term.
Bottom Line?
FleetPartners’ strong FY24 momentum and strategic initiatives set the stage for continued growth, but execution of its transformation and market conditions in New Zealand will be key to watch.
Questions in the middle?
- How will FleetPartners manage margin pressures amid used vehicle price declines?
- What impact will the Accelerate program have on profitability beyond FY25?
- Can the company sustain growth in the Novated segment as EV demand evolves?